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Transition to Networx telecom contract cost $395M more than planned

The government spent $329 million more on the transition to the Networx
telecommunications contract than it had to over the last six years.

The Government Accountability Office found the 33-month delay in moving to the
Networx contract from the FTS2001 vehicle caused agencies to miss out on
potentially tens of millions of dollars in savings and spend hundreds of millions
more dollars than planned.

On top of the $329 million spent by agencies, the General Services Administration
needed to extend contracts with vendors to support program management and other
staffing expenditures, which cost it an additional $66.4 million than it initially
planned pushing the total cost overrun to $395.4 million.

"[T] he complexity of the process for transitioning to Networx, which was
compounded by a decline in telecommunications expertise at the agencies as well as
weaknesses in project planning, contributed to delays in agencies' transition to
Networx," GAO auditors wrote in the report
released Monday. "This in turn resulted in increased transition costs, missed
savings, and delays in implementing new technologies."

GSA announced in April 2013 it had completed the
transition to Networx from FTS2001.

The reasons for the delays were numerous, GAO found.

One of the biggest ones was the confusion by agencies over which contract to use.
GSA split Networx into Enterprise and Universal vehicles, but GAO found agencies
were unsure which contract to use because they were so similar. Additionally, the
dual contracting strategy ended up costing GSA more to run both vehicles.

"[B] ecause of industry consolidation by the time the contracts were awarded, the
strategy was not as effective as had been envisioned. Specifically, three of the
five contractors awarded Enterprise contracts were also awarded Universal
contracts, and most services are provided on both contracts," the report said.
"GSA agreed that the Universal/Enterprise construct should not be repeated in the
follow-on NS2020 program."

Networx line items grow from 5,100 to 13,400 by June 2011

Another reason for the delay was the complexity of Networx as compared to FTS2001.
GAO found Networx initially included 5,100 line items and increased to 13,400 as
of June 2011. Networx also included 54 services as compared to 26 under FTS2001.

The increase in the number of services and line items coupled with the lack of
telecommunications and contracting expertise among federal workers were among the
biggest root causes of the transition delay, GAO found.

The lack of expertise was one of the major recommendations coming from the report.

"We have noted that agencies should work with the Office of Personnel Management,
the central human resources agency for the federal government, to pursue a
strategic, governmentwide approach to addressing these critical skills gaps," GAO
said. "GSA has yet to fully study this issue, and agreed that understanding
expertise shortfalls would be useful for future transition planning purposes;
however, it has not established a plan to do so. These skills include contract
expertise, legal expertise, asset management, and program management. Identifying
current and projected shortfalls in critical telecommunication specialist roles
early in the process of planning the next transition could better position GSA to
assist customer agencies and help avoid future delays."

GAO issued the report as GSA is planning the next generation of telecommunications
contracts under the Network Services
2020 strategy to replace Networx. That transition, GAO stated, may take even
longer as GSA already plans to extend Networx three more years to expire in 2020.

Auditors recommended GSA implement the lessons learned from Networx more
aggressively, especially those factors that contributed to the delays and
increased costs.

"The rocky transition to the Networx contracts was, unfortunately, a lesson in
lost opportunities," said Sen. Tom Carper (D-Del.), chairman of the Homeland
Security and Governmental Affairs Committee, in a statement. "Given that we are
trying to do more with fewer resources in every part of the government, it is
essential that programs like Networx reach their full potential and garner all
possible savings. One of my core values is if it isn't perfect, make it better,
and I believe that the General Services Administration must look at these lessons
learned and perfect its process so the transition to the next suite of
telecommunications contracts does not veer off-course as the Networx transition
did."

Sen. Tom Coburn (R-Okla.), the ranking member of the committee, blamed the Networx
problems on the systemic contracting problems the government faces.

"Too often we've seen poor planning, unnecessary duplication, and inadequate
management at GSA," Coburn said in a statement. "Even worse, as the report shows,
it cost taxpayers $329 million more than if GSA had adequately transitioned to
Networx on schedule. Such mismanagement and waste is simply unacceptable,
especially at a time of increasing debts and limited resources. GAO has made a
number of recommendations to GSA, including that GSA establish better transition
plans with detailed time frames to get this program back on track. GSA should
implement these recommendations and take immediate steps to prevent future delays
and wasteful and unnecessary spending."